Holistic approach helps to minimise duties payable

Ignorance may be bliss, except maybe when it comes to tax. Therefore companies not wanting to overpay on customs duties should always have a clear view of their entire supply chain. This is the advice from Deloitte senior manager Ronnie van Rooyen who says that traders need to be aware of the applicable rebates for imported goods relevant to their specific industries to legally minimise the duties payable. “Minimising customs and excise duties requires an inherent understanding of tax revenue within the business supply chain,” says Van Rooyen. “In the 2009 tax year Sars secured R26.5bn from customs and R462m in excise and unless businesses holistically consider their supply chains, the receiver will collect customs duties on the declared import without consideration for the downstream chain – meaning businesses will overpay on these duties.” He says companies seeking to minimise customs duties therefore must compile a consolidated, holistic overview of its supply chain activities. “Thereafter the company can critically investigate the customs duty and fiscal implications along the chain to accurately identify and quantify the taxes paid. Developing a cost-effective supply chain avoids potential tax overpayments, penalties and delays in the movement of goods,” he points out. Van Rooyen says in viewing the supply chain in isolation, companies miss saving opportunities and incur unnecessary costs. One example arises from importing unfinished goods and exporting the manufactured finished product, but not securing a customs rebate for the manufacturing activity and therefore receiving a rebate on the customs duty paid on the imported goods. “In triggering potential customs savings, companies must consider tax efficient structures for imports, manufacturing and exports within their tax management. Essentially, minimising duties directly and positively affects the bottom line and the challenge comes in maximising tax efficiency while maintaining compliance,” he said.